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Credit Rating Agencies

There are 3 credit rating agencies in the UK. They are Experian, Equifax and Callcredit. These are commercial agencies that get their data from several different places such as the courts (for county court judgements) and the electoral register and financial institutions. Whenever you take out any loan or any credit card these agencies are informed. They are also informed, by the banks and credit card companies, if you repay the loan on time, whether you are late with payments, whether you default, whether you only pay the minimum balance on your credit card etc. Basically, all the information from all these transactions is used to build up a picture of your creditworthiness – this is called your ‘Credit Rating’.

If you apply for a credit card or loan or overdraft, the financial institution will check with one of these credit companies to see what your Credit Rating is.

  • It is a good idea to check, about once a year, to see what your credit rating is. Just contact one of the above companies. It is always possible that they have made a mistake (maybe they have been given the wrong information). Also, identity theft is getting more and more common. If someone, without your knowledge, has used your name and date of both and other financial information to obtain a loan, and then defaulted on it, then your credit rating could be affected, and this would affect your ability to borrow. However, it is a simple process to correct your credit score once you know about any mistakes.
Strangely having very little activity, such as no credit cards or loans, negatively affects your credit rating also. The best thing, for credit rating, is to have had several loans and credit cards over many years, all serviced impeccably.

When you are in debt, the easiest thing is to stop paying the credit card bills and making repayments late or not at all. However, this will affect your credit rating. Speak to cleardebts.co.uk in order to find out the best way of dealing with your debt, whilst not damaging your credit rating and with it the possibility of borrowing more in the future.
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